ABSTRACT
In business, and even in our personal life, we often make decisions based on limited data. What we do is take a sample from a population and then make an inference about the population characteristics, based entirely on the analysis of this sample. For example, when you order a bottle of wine in a restaurant, the waiter pours a small quantity in your glass to taste. Based on that small quantity of wine you accept or reject the bottle of wine as drinkable. The waiter would hardly let you drink the whole bottle before you decide it is no good! The United States Dow Jones Industrial Average consists of just 30 stocks but this sample average is used as a measure of economic changes when in reality there are hundreds of stocks in the United States market where millions of dollars change hands daily. In political elections, samples of people’s voting intentions are made and based on the proportion that prefer a particular candidate, the expected outcome of the nation’s election may be presented beforehand. In manufacturing, lots of materials, assemblies, or finished products are
sampled at random to see if pieces conform to appropriate specifications. If they do, the assumption is that the entire population, the production line or the lot from where these samples are taken, meet the desired specifications and so all the units can be put onto the market. And, how many months do we date our future spouse before we decide to spend the rest of our life together!
